From Ashok Rao.
Is the mind-blowing wealth of 30,000 Americans absurd? Sure. But it would be difficult to say, as the video suggests, these elite are beneficiaries of any inequality other than owning the right capital at the right time. (Indeed it is capital gains in the stock market that drive the income of this group).
Pointer from Tyler Cowen.
I strongly recommend Rao’s entire post. Later, he writes.
Sure the bottom 95% are doing a little worse and the top 5% a little better today, but the changes are nothing near the drastic increase in income inequality in the same time period. This suggests policy has changed favoring high income over low income in a much clearer fashion than high wealth over low wealth. This isn’t surprising given that much of the richest 0.01% are executives and bankers, not heirs to mounds of wealth. After all, it is the group of affluent-but-not-rich people for whom we subsidize housing (indeed more than we do food for the poor!) It is for the doctors we protect the medical market. It is for the middling executives and partners at law firms nobody has heard of we decrease taxes on those earning more than $200k. It is for the top 15(- top 2)% of Americans who couldn’t afford frequent flights to Florida without Spirit or Southwest we refuse to tax carbon emissions from airplanes the way they should be!
Interesting stuff. I’m also blogging (new) about the economy at anthonyhemm.wordpress.com
Rao ends with a plea to help low income people gain some economic security.
But if the low income are continually out-bid by machines, and the fecund womb of the desperate from elsewhere, can we really expect better in the long run?
Ok, the question is how much economic security are we talking about?
Last time I checked, even very poor people in developed countries are given access to welfare for their physiological necessities; medical care, food, shelter, and some cash for clothes. They are also able to use many publicly provided services without paying taxes, such as public education for their children. Many cities and states provide much, much more – free public transportation, child care, and so on. If you’ve even done social work in a trailer park, you’ll notice that many of our bottom percentiles have subsidized lifestyles that would have been near what the median wage-earner could achieve a century ago.
I’m not saying that existence is nice and comfortable; it’s obviously not. But it is economically secure. We have millions of people who produce next to no economic output, but they are not desperate in terms of being at the very edge of dying of starvation, exposure to the elements, etc.
So the question is, how far above the current level do we need to go to provide people with ‘economic security’. The devil’s in the details. It’s a nice term, but I think you’ve got to admit, it’s pretty hazy.